Home » Blog » How to Accept Credit and Debit Cards for Small Businesses

How to Accept Credit and Debit Cards for Small Businesses

People are used to paying on their card in the supermarket, the corner shop and even the pub. Many customers now expect to be able to pay for everything by card. However, 20 million businesses in Europe still don’t accept card payments.

Certain industries and types of business are less likely to accept card payments, including many small businesses and self employed people. One of the reasons for this is that for years accepting card payments has been prohibitively expensive for many small businesses. When thinking about offering card payments it is worth looking at the advantages of accepting cards.

Advantages of Accepting Cards

Increased security compared to cash

Payment made at time of sale and guaranteed

Customers place more trust in businesses that offer card payments

Card machines log all transactions which can help with record keeping and resolving any disputes

Won’t lose customers who only have a card and no cash

Reduce potential exposure to counterfeit money

Reduce the need to carry change

When it comes to accepting card payments in 2013 small businesses have 2 options. If you are a small business owner or self employed you can either sign up for a merchant account and process transactions through a merchant services provider or you can get a mobile card reader which works with your smartphone or tablet and pay a fee per transaction.

Option 1 – Accepting Credit and Debit Cards with a Merchant Account

A merchant account is a type of bank account that allows a business to accept card payments. The account is held with an acquiring bank though other companies may also be involved in the processing of payments. Merchant accounts are commonly arranged through an independent sales organisation who work with many acquiring banks.

There are a number of charges to be aware of when setting up a merchant account: The setup/account activation fee, the cost of terminal rental/purchase, the minimum monthly service charge, the cost per transaction (which can vary for different types of transaction), early cancellation fees, statement fees, annual fees. All of these may not be applicable but its worth asking about all of them before you sign up.

Once you have a merchant account and your card machines you are ready to take payment. The type of card machine/s you require will depend on the type of business you are operating. Countertop terminals are commonly used in retail, portable terminals in hospitality and mobile terminals where payments are taken away from the company premises. Interestingly, there have been recent developments in mobile terminals which leads us to….

There are now available on the market next generation mobile card machines which allow merchants (or individuals) to accept payments with a lightweight device and their smartphone. Some are available with no merchant account. All the merchant needs is the card reader, which is inexpensive or free then they pay a small charge on each transaction.

The devices are suitable for many types of business such as taxi drivers, tradespeople, travelling salesmen, food trucks, hair and beauty professionals, artisans, delivery services and professional services amongst others.

At present there are 3 main players in the UK that offer this type of solution: iZettle, Payleven and Sumup. iZettle offer signature verified devices for £20 (with £20 credit) and a chip and PIN machine for £99, Payleven offer a chip and PIN reader for £89 and Sumup offer a chip and sign device which is free. The transaction fee is 2.75% for all 3 companies.

Before you apply for a card reader it is worth doing a little research to find out which is right for you. The ‘swipe and sign’ and ‘chip and sign’ card readers are aimed at sole traders and micro businesses while the chip and PIN readers are suitable for small and medium businesses.

Summary

Customers are more demanding than ever and not accepting card payments is no longer really an option for many small businesses. Small businesses can offer card payments through a merchant account and with card machines and that is the best option for many types of small business. However, there is now an option to choose a mobile card reader which works with a smartphone and works on a cost per transaction basis.